1. Foreign Secretary, may I welcome you, together
with your two colleagues, Mr Peter Ricketts, Political Director
of the Foreign Office, and Mr Kim Darroch, Director, European
Union. We have reached an informal agreement that roughly for
the first half hour or so of our session we shall talk about the
special European Council of Barcelona and thereafter discuss with
you the question of Turkey. As you know, the Committee visited
Turkey last week and had a very productive session in adding to
our knowledge for the eventual report. Let me start in this way,
Foreign Secretary, that you probably saw the editorial in the
Financial Times headed "Broken Promises" yesterday,
saying effectively that two years ago at Lisbon a rather bold
liberalisation programme was agreed by the European Union and
that thereafter in Stockholm a large part of the liberalisation
programme had stalled. Do you approach Barcelona with any optimism,
given the fact that there are major elections in our partner countries
in prospect, that key vested interests within this countries could
conceivably be threatened by further liberalisation?

(Mr Straw) Let me just paraphrase an
opening statement which I have here which helps to put the context.
Lisbon, which was an economic reform agenda agreed two years ago,
provided for a ten-year programme. We are now two years into it.
The aim is to make the European Union the most dynamic and modern
economy in the world with full employment, and to do so essentially
by completing the single market. You ask essentially what progress
has been made in the last two years. Over the last two years the
European Union has created an additional five million jobs and
we would say that some of them (you cannot say precisely how many)
and probably many of them have arisen because of the changes that
were agreed at Lisbon. There have been some specific improvements,
for example, opening up the European Union telecoms market, which
has meant cheaper phone calls with the average cost having been
cut by half since 1998, better connection with the Internet, nine
out of ten schools now on line, the number of households with
Internet access has doubled, more Europeans on line than Americans.
We are helping the small business sector with a charter to small
firms and action to reduce unfair subsidies and promote fair competition.
You are asking is there more to be done. Yes, of course there
is more to be done. We have to learn from the success of the United
States economy. British citizens would be £5,000 richer if
we matched American productivity. European Union firms spend 40
per cent less on R&D than in the United States. We are all
aware of what happened in Lisbon and also what happened at Stockholm.
What are the objectives we have set for Barcelona? The detail
is spelt out in this White Paper which the Chancellor has published[1].
They include progress on efficient labour markets where we want
the commitment to welfare to work, policies for long term unemployed
and older workers, a single EU financial market which should result
in cheaper borrowing for firms, better returns for savers, cheaper
insurance policies, action to bridge the gap between the EU and
the US on research and development and to promote biotechnology;
on so-called e-Europe a faster Internet, better links across borders
and broadband Internet access to be available across the European
Union; better regulation by cutting red tape and assessing the
impact of new legislation, and progress on energy liberalisation.
If you take just the better regulation, thanks to Lisbon it is
already easier and quicker to form a company than it was and that
is as a result of changes which have been made since Lisbon. Has
progress been as fast as we would have wished in an ideal world?
No, it has not. Is the situation better by a long way than it
would have been without Lisbon? Yes.

2. Foreign Secretary, you have made a bold attempt,
but I do not think anybody will have been very persuaded by that.
Surely the consensus is that it has really stalled? The FT
put it this way, that "too often a failure to advance on
the fundamental questions is submerged by a fresh wave of target
initiatives and bench marking exercises". Have you not run
against the buffers effectively of strong national vested interests?

(Mr Straw) Of course the European Union
works in the context of being a union at the moment of 15 nation
states which are democracies. That is a huge strength. It also
means that their elections take place in different parts of the
European Union not on a scheduled timescale. At any one time,
and it happens that there are a bunch of elections this year,
there are elections. There we are; we have to take account of
those. I defer to no-one in my respect for the leader writers
of the Financial Times but if you go through the score
card that is at the back of this document, which I am sure, Chairman,
you will have read, you will see that there very straightforwardly
are set out the operational texts in Lisbon with ticks, crosses
and dashes as to whether or not progress has or has not been made
or whether, as it were, the jury is out. There are many ticks,
there are more crosses than we would like, but there is still
progress being made. I will just say this in terms of targets.
My experience over a slightly longer timescale of such a process
was over the Tampere agenda. The Tampere agenda has not gone as
fast as we would have wished when that was agreed in October 1999,
but without the Tampere agenda we would not have made progress
at all. That is the point I am making.

3. Last July the Prime Minister rather dramatically
said at Sao Paolo that Barcelona will be make or break. Will it,
do you think, be make or break?
(Mr Straw) When I was doing a lobby briefing earlier
today the ever-efficient official spokesman for the Prime Minister
(not Mr Alistair Campbell) had the full text of what the Prime
Minister said at Sao Paolo. I do not have it here but it put that
point in its context. There is not a question of breaking the
Lisbon agenda at Barcelona. It is a question of making progress
on it. I went back and looked at what the Prime Minister's official
spokesman said and what he said was that we have already a strong
package of structural reforms but we need to deliver it. Barcelona
is another staging post, if you like, in that process of delivering
that strong package of structural reforms.

4. Is that the gloss put on it today?
(Mr Straw) That was what the Prime Minister's official
spokesman said.

5. But not everyone defers to the Prime Minister's
official spokesman.
(Mr Straw) Is Lisbon going to be broken at Barcelona?
No. There is progress being made. It is not as fast as we would
wish, but

6. We have asked about the quotation. The Prime
Minister said, "Barcelona next year is make or break for
economic reform in Europea real test of our collective
European leadership." What does the Prime Minister's spokesman
say about that?
(Mr Straw) As I said, is Lisbon going to be broken
in Barcelona? No, so with a bit of luck the Prime Minister's fears
will not arise.

7. We tend events, dear boy. We tend to be blown
off course in these special conferences. Clearly we now have a
crisis in the Middle East. We have bellicose noises from some
in respect of Iraq and the crisis in Iraq deepening. There is
Zimbabwe. Is it your judgement that the clamour of other crises
elsewhere in the world will push these items off the table?
(Mr Straw) No. It is always expected that there will
be foreign policy matters discussed at these informal European
councils. Of course there will be another one at the end of this
Presidency in Seville, which is more likely to be dominated by
foreign policy matters. There will, however, be a full discussion
of the Middle East peace process on Friday evening. We will be
raising the situation with Zimbabwe as well.

Mr Olner

8. You spoke, Foreign Secretary, to the Chairman
about being broken in Barcelona. I would like to look at the making
instead of the breaking. Did you think the difficulties that were
apparent at ECOFIN on 5 March, where the French refused to agree
to full liberalisation of their energy markets, is connected with
the US decision to impose tariffs on steel imports? Do you think
this will have wider implications on the EU/US relationship and
will you be discussing those at Barcelona?
(Mr Straw) I am quite sure there will be a good deal
of discussion in the margins and maybe in the full sessions about
the US's decision to impose tariffs on steel imports from, amongst
others, the European Union. As my colleague, Patricia Hewitt,
spelt out in the House last week[2],
we regard this decision by the United States as wrong, contrary
to their obligations under the World Trade Organisation texts,
and also a decision which in the end will be counter productive
to the interests of the United States steel industry as well as
our own. Is there a linkage between the approach of the French
on liberalisation of the energy market and the reposition by President
Bush of tariffs against steel from the European Union? No. It
is a matter of historical record that France's dirigiste
approach to energy pre-dated the imposition of tariffs by President
Bush.

9. It might be a useful hanger to hang a coat
on.
(Mr Straw) No. Look: the French have a different approach
from us. We hope to persuade them otherwise. If you read the French
newspapers you will see that one of the concerns of the French
public is that if the energy market is liberalised it will go
the way of the California energy market with browning out and
all sorts of things. It does not follow that a liberalisation
of the market has to be in the way in which it happened in California
and where there was inadequate regulation and a browning out.
I could also say to those who think that the state is seen as
the very best deliverer of electricity that one could think of
plenty of examples, not necessarily in France which has an efficient
energy sector, but certainly in the former Soviet Union where
the fact that the energy production is state run did not ensure
its efficiency. We think that we can ensure that there is full
coverage in terms of delivery of energy, which is one of the anxieties
that the French have, whilst ensuring that the costs are cut.
The costs of gas in the UK, for example, to the domestic consumer,
are now a third less than they are in France and Germany as a
result of liberalisation.

10. Turning to more international matters, I
do not think yet we have won the war against terrorism. Do you
envisage having any discussions with your counterparts in Barcelona
about the possibility of military action against Iraq?
(Mr Straw) The issue of Iraq is unlikely formally
to be on the agenda. It should be seen in the context in which
decisions about Iraq, as others have made clear in the last ten
days, are going to take place in a slightly slower time than the
next few days, to put it very mildly. We shall be talking for
a much longer period.

11. If somebody raises the argument you will
not walk away from it?
(Mr Straw) No, I never walk away. If you are asking
me in terms of my own character, whether I ever walk away from
an argument, no. If I cannot find anybody to argue with on a subject
I will argue with myself. It is more likely to be raised in the
General Affairs Council, the Foreign Ministers' Council, and then
it could easily come up for discussion in Seville in the last
European Council of this Presidency.

Sir John Stanley

12. Foreign Secretary, exactly two years ago,
in February 2000, in the Government's White Paper IGC Reform
for Enlargement: the British Approach to the European Union Intergovernmental
Conference 2000[3]
the Government stated this: "Clearly some areas, such as
treaty change and accession, will have to remain subject to unanimous
agreement, and the Government has also made clear that we should
insist on retaining unanimity for other key issues of national
interest such as treaty change, taxation, border controls, social
security, defence and own resources." Two weeks or so ago
in The Hague you said: "As both I and my successor as Home
Secretary, David Blunkett, have argued, asylum and immigration
policy could be conducted more efficiently for all if QMV (Qualified
Majority Voting) were the rule. Such a move would patently be
in Britain's national interest." Why, in the space of two
years flat, on what has been a key issue, the issue of border
controlsand obviously that bears directly on asylum and
immigrationhas the Government moved its position for regarding
it as being in the national interest to preserve unanimity, and
now you are taking the position that it is in the national interest
that it is covered by QMV?

(Mr Straw) With respect, Sir John, the
two things are not incompatible. Border controls are simply an
aspect of immigration and asylum policy and that statement, which
I recall, was written in the full knowledge that everybody had
of the terms of the Amsterdam Treaty which, by what is now Article
66 of the Treaties of the European Union, provided and provides
that in any event in the area of asylum policy we would move from
what is Pillar 3 to Pillar 1 and it could also move by a unanimous
decision in the room from unanimity to QMV. That is the first
point. The second point I would make is this. John Maynard Keynes
said: "If the facts change so do we. What do you do?"
The simple fact of the matter is that what the United Kingdom
is faced with on asylum policyand, as I say, these are
not incompatible at allis a situation where it has become
clearer and clearer that the United Kingdom and a number of mainly
northern European countries are disadvantaged by the fact that
what are supposed to be a single set of rules applying across
Europe, the obligations under the 1951 Refugee Convention, are
applied very differently by domestic administrations and above
all by domestic courts. That then leads to the kind of outrageous
pressures that we have seen on the British system running through
Sangatte. If there is a policy objective, which I hope there is,
of seeking to ensure an end to asylum shopping, an end to these
preposterous scenes that we see, then yes, one thing that has
to happen is that France have to take their obligations more seriously
for securing the rail portal on their side of the Channel but,
secondly, what we also need is a common set of rules and practices
for asylum under the umbrella of the 1951 Convention. If you want
to achieve that, and it is very much in our interestsit
is what I had in mind when I wrote that section you quotedthen
you are more likely to achieve that by QMV, because if you do
not have then any country which is currently advantaging itself,
is pushing off the burden of asylum seekers on to other countries,
is able to do so.

13. Your speech in The Hague went much wider
than just simply asylum. The phrase you used was "asylum
and immigration policy", which is the totality of immigration
policy. Surely, Foreign Secretary, you cannot seriously maintain
that it is possible to move to asylum and the totality of immigration
policy being settled by QMV and maintain that you have any serious
position by way of unanimity on border controls. The two just
do not run together.
(Mr Straw) With great respect, on the border controls,
do we control those coming in at the border or do we do what other
countries do, which is principally have internal controls? There
is no reason at all that I can think of why that decision, which
is essentially in practice whether or not we join Schengen (a
position which is protected in any event by treaties and, so far
as I recall, could not be the subject of QMV), so the question
really does not arise. That can be a subject of what amounts to
unanimityit is actually our call and we cannot possibly
be overridden on thatwithin the context in which, where
we judged it to be in our interests, we would move towards QMV
on asylum and immigration. Again, what I said was words to the
effect that QMV would be the rule. I am not being casuistic here
but if QMV is the rule then there can be exceptions to that rule
and that too is taken full account of in the way in which the
treaties are constructed.

14. Do you not think that the great majority
of the British public, hearing the Government repeatedly for years
saying that it is going to maintain the veto in border controls,
were led to believe that that retention of the veto applied to
the totality of asylum and immigration policy? That I believe
is how it has been widely perceived and it is now apparent that
the Government has abandoned that position.
(Mr Straw) That is not the case. There is no difference
between border controls and the whole gamut of asylum and immigration
policy. It is not just about border controls. It is the whole
issue of asylum. People claiming asylum when they do not observe
the border controls is when the border controls palpably do not
work and they break through them and in a sense the end effect
of border controls is otiose. Then there are all the immigration
rules, what rules are applied by visa posts abroad and all sorts
of things which are not directly germane to border controls. What
we have said about border controls will continue to be the case,
but I just say this to you, Sir John, that if you look at our
experience on QMV, and I am perfectly prepared to say that as
a general matter over the last 15 years I have moved my own position
in the light of experience of the facts, which is what I think
all of us need to do, then this country has actually benefited
from QMV many more times than it has lost out. I have to say that
it was a real indication, sitting in the JHA Council and having
texts ranging from the very important to the fairly prosaic but
none the less useful being blocked by individual countries who
were unwilling to shift because of some internal domestic matter
when in fact they would have wished to shift had QMV applied.
I can think of just one, which is the recognition of driving disqualificationsquite
an important issue. If you have what amounts to a single market
in terms of where you can drive it is a good idea for people not
to be able to shop around in terms of driving licences and exemptions
from driving disqualifications. During our Presidency, when I
was in the chair, it took a huge amount of effort, and I do not
think we were ever able to complete the text, to try and get unanimity
round the table over the recognition of driving disqualifications.
Why? Because in the minimum that we said that there should be
a driving disqualification of 31 days but there was one country
where they said that that constitutionally the maximum for a driving
disqualification in that country was 28 days and therefore what
we were proposing was going to be unconstitutional in that country.
At the same time, the Justice Minister said that if there had
been QMV they would have just said, "Fine". It would
have overcome the blockage. It meant that what was quite an important
change to make roads safer across Europe was blocked by the absence
of QMV.

15. You have acknowledged a shift in your position.
(Mr Straw) Not on border controls, with respect, Sir
John.

16. You have acknowledged a shift in your position
on asylum and immigration policy and I think we shall want to
look further at how moving to that QMV can possibly be reconciled
with an attempt to maintain a veto on border controls. Can I just
take you through the other areas very briefly, Foreign Secretary,
that you listed in the White Paper previously? Very quickly can
you say, is the Government's position to maintain unanimity on
treaty change? Yes or no?
(Mr Straw) By definition, yes.

17. Accession? Unanimity?
(Mr Straw) For the moment. Treaty changes, of course
are intergovernmental treaties by definition, and so far as these
other things are concerned, where we have got to is that for the
moment that is the position. There is a convention on the future
of Europe on which a representative of this Select Committee sits.
That is likely to come forward with a series of proposals and
from that we will make decisions. If you are asking me am I going
to say to you now that whatever the arguments put forward by the
Convention, and whatever the change in circumstances, we regard
the current position on QMV and unanimity as fixed in concrete,
the answer is no because I do not believe that would be in the
interests of the British people.

18. You are now saying a very significant thing
to this Committee, and indeed to the wider public. You are basically
saying that each and every one of the items that the British Government
just two years ago said were so important in the national interest,
that unanimity had to be maintained, is now up for grabs
(Mr Straw) No.

19.in terms of access, taxation, social
security, defence, own resources, and I do not see why on this
basis you can make an exception on treaty change because it is
possible to moot a treaty change by QMV. What are you saying?
(Mr Straw) No, Sir John, I am not saying that. I am
saying what I have just said, and of course of those items we
have no proposals to change from unanimity over things like defence,
foreign policy, taxation and so on. If you are going to go through
all the details of the treaties in respect of QMV and unanimity
and say it will never ever be changed, we will never even listen
to the arguments, the answer is no. With great respect, it was
exactly that approach which led Britain repeatedly to lose the
argument and isolate itself in previous councils before 1997.
What we have said and what I have said in my speech is that where
key national interests apply that is the test. The most obvious
one is defence and linked into that foreign policy. Of course
we maintain the national veto. We do on many areas at the moment,
and this was decided by the Conservative Government 30 years ago
(not all of them) in respect of taxation, ditto social security.
Do you close your ears and your eyes to future arguments? No.